Just did my mother-in-law's taxes. She turns 63 on Thursday. She's still working, thus has 'earned income' for the IRA contribution. She's in the income bracket where she's elegable for the full deduction for a traditional IRA. I curious if she can make a contribution and withdraw in the same year? IOW, she contributes $3500 (this year), but withdraws $2000 (which is already in there from last year's contribution)?

Seems like legal money laundernig or something like that to me :) Is there some stipulation about not being able to withdraw current year contributions or anything like that?

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